My top FTSE 250 dividend picks for 2019 and beyond

G A Chester reveals three FTSE 250 (INDEXFTSE:MCX) dividend stocks he’d be happy to buy and hold for decades.

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The mid-cap FTSE 250 index offers plenty of candidates for investors seeking dividend stocks. And with the market having fallen in recent months, yields have risen. In fact, there are some truly mammoth — high single-digit and double-digit — forecast payouts around.

However, I have doubts about the sustainability of the dividends of many of these mega-yielders. I’m much more interested in seeking out opportunities to buy into strong businesses, with decent yields and good prospects of delivering dividend growth long into the future. Here are three companies I reckon fit the bill and that I’d be happy to buy a slice of today.

Long-life assets

HICL Infrastructure (LSE: HICL) is an investor in infrastructure assets, such as schools, hospitals, libraries, barracks, roads and rail. It has more than 100 projects in its portfolio, providing it with long-term, stable and predictable cash flows, often with good inflation correlation. Its latest half-year results showed 64% of income coming from the UK, 16% from Europe, 16% from North America and 4% from Australia.

Since listing on the stock market in 2006, the company’s annual dividend has increased 32%. In the half-year results, the board said it’s on target to deliver an 8.05p dividend for its current financial year ending 31 March 2019. This would be a 5.1% uplift on last year and give a yield of around 5% at the current share price. I’m not concerned by the rise of rhetoric about nationalisation of infrastructure assets in UK political circles, because I’m confident that if HICL were to lose any of its assets, it would have to be fairly compensated.

Inflation-smashing dividends

National Express (LSE: NEX) is another FTSE 250 stock I’m keen on right now. This long-established transport provider will be well known to UK readers, but what you may not know is that more than 80% of its operating profit comes from overseas. In addition to the UK, it provides bus and coach services in North America, Spain and Morocco, as well as rail services in Germany.

As my colleague Alan Oscroft commented, covering its latest solid trading update, the company has been “paying attractive dividends for years, [and]its annual rises have been coming in way ahead of inflation too.” City analysts are forecasting another inflation-smashing rise for the current year — namely, a 10% increase to 14.86p, giving a yield of around 4%. A further hefty uplift in the payout is pencilled in for 2019, raising the yield to 4.4%.

Healthy returns

My third FTSE 250 dividend pick for 2019 and beyond is Primary Health Properties (LSE: PHP). This company invests in the freehold or long leasehold of modern purpose-built healthcare facilities in the UK and Ireland. Its portfolio consists of over 300 facilities. The majority are GP surgeries, and other properties are let to NHS organisations, pharmacies and dentists. With most of its rental income coming directly or indirectly from a government body, and subject to upward-only or indexed rent reviews, this is a low-risk, long-term and non-cyclical business.

The company has delivered 21 successive years of dividend growth, and City analysts expect this to continue with a 2.9% increase this year to 5.4p, and a similar rise in 2019. At the current share price, this gives a yield of a little under, rising to a little over, 5%.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Primary Health Properties. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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